Recordkeeping Requirements
This is an area where I like to err on the side of conservancy. I realize that most people will tell you that if you are not audited within 3 years of filing your tax return, that you will probably not get audited for that tax year. However, I believe that we should maintain our records a little bit longer… regardless of whether the IRS will audit us or not.

With that in mind, I recommend that we maintain all records relating to our tax returns for a minimum of 5 years and a maximum of 7 years. But, I’m not done yet! Then, I believe strongly that we should never throw away a single tax return. I’m not talking about keeping the receipts…just the tax return and the related W-2 forms. This document (our tax return) is the only record that we as taxpayers have to prove and verify our earnings. Assuming that the social security system will still be around in another 20 years or so, the tax return is the only document that you can fall back on to prove to the IRS that you have “paid into the system” for any given year.

Don’t worry if you have already tossed a bundle of tax returns in the trash. It does no good to worry. But starting from this point on, keep all your tax returns until you die or, in the very least, start collecting social security.

Besides our tax returns, there are other documents that we should maintain…that would be any and all receipts concerning the purchases and sales of assets. In the category of assets, I include stocks and other negotiable instruments, real estate, and other collectibles. We should hold onto all records that regard the original purchase, improvements made to assets (when dealing with real estate), and the records concerning the sale or disposal of that asset, up to and including seven years after the asset has been sold, transferred or disposed of. This is key to proving cost basis when calculating a capital gain, capital loss or the value of a gift or estate. If you need more finance assistance on getting over a debt, hire the Best IVA Company UK has.

Another facet of record retention is the actual methodology in maintaining your records and tax deductible receipts. I think that it is important to find a method for filing these records and receipts that will be simple, orderly and most importantly it needs to be a task that is agreeable to you. 

I could tell you what I use, but let us not forget that I am the anal-retentive accountant…what works for me may bore you to tears and force you to throw in the towel. Rather we review your needs and organization habits together and find a system that fits you personally.